MARQUEST MONTHLY PAY UPDATE – JUNE 23, 2014

MARQUEST MONTHLY PAY UPDATE – JUNE 23, 2014

Last week the Marquest Monthly Pay Fund (A units) closed at $5.43, up from $5.41 the previous week. The TSX was up 0.7 percent in the same period. The US Federal Reserve’s relatively dovish policy statements, highlighting that policy would remain loose for some time due to the benign outlook for inflation, drove markets higher. The Fed’s Open Market Committee comments outweighed concerns about energy prices and issues in Iraq as well as the CPI figures released last week which showed core inflation rose to 2.0 percent in May (from 1.8 percent in April), a 15 month high.

Leading contributors in the portfolio were Canexus (up 8.8 percent), Vermillion Energy (up 2.8 percent) and TD Bank (up 1.3 percent). Canexus produces sodium chlorate and chlor-alkali products largely for the pulp and paper and water treatment industries. Canexus’ five plants in Canada and one plant in Brazil are reliable, low-cost, strategically located facilities. Canexus’s stock was highlighted at National Bank for reaching a technical bottom and “showing the best technical action in two years.” CIBC produced a research piece on its breakup value.

Laggards in the portfolio were Sherritt International (down 3.5 percent), Bonavista Energy (down 2.1 percent) and Arc Resources (down 1.9 percent). Sherritt has nickel operations in Cuba and Madagascar as well as oil and gas in Cuba, Spain and Pakistan. BMO initiated coverage with an outperform rating citing the leverage to nickel and de-risking as the Madagascar project ramps up to full capacity as well as the improved balance sheet due to the sale of the coal operations. The Materials Sector was up 4.4 percent on the week but Sherritt did not participate in the sector’s strength.